When hospice reverts to the lowest common denominator and leaders obsess about metrics, it's time to speak. Self-inflated leaders assume clinicians give until their backs break, given no raises for years. A clinical ladder is a rainbow’s pot of gold. Others have a sorrier job and must be motivated by money. Abysmal leaders dangle extrinsic rewards for admission, hiring and EDBITA targets. “Sign on” bonuses entice people into a poor work environment. Employees’ voice equals their raise, zero.

Sunday, August 10, 2014

Qualifying EDBITA

StrangeTony,

Gentiva CFO Eric Slusser offered in the Q2 earnings call:

For 2014, we now expect full year net revenues to be in the range of
$1.96 billion to $2.0 billion. Additionally, we have raised the lower
end of our full year 2014 adjusted EBITDA guidance to $183 million to
$195 million and our adjusted income attributable to Gentiva
shareholders to $0.95 to $1.15 on a diluted per share basis. This
outlook includes the full year impact of the Harden acquisition and the
final 2014 Medicare Home Health and Hospice reimbursement rates issued
by CMS, but excludes any ongoing losses from closed or sold locations as
they are wound down and any acquisition-related expenses.

On a pro-forma basis the company should be able to generate revenues
between $2.1 and $2.2 billion, while adjusted EBITDA should come in
between $210 and $220 million, excluding share-based compensation.

That's a revenue shortfall of $104 to $200 million and EBDITA gap of $25 to $27 million from prior expectations.

Excluding acquisition related expenses is interesting. Gentiva is spending big bucks on recruiting a suitor that will keep their top management team in place. Barclays Capital, Greenberg Traurig, Kekst, Edge Healthcare Partners and MacKenzie Partners don't work cheap. Will those costs ever be revealed?

CapEx, probably expected to stay fairly consistent. We're kind of in
that $3 million-a-quarter mode. There's a little bit of increase, but
moderate. As we have talked about, we -- the last piece of our
integration work is to convert the Harden Home Health over to our
GentivaLink system in the third quarter. By no means is that a
significant amount, but that's a moderate increase for Q3, as that is
completed this quarter. Other than that, when I look at what's in there
and the expectations, I don't see anything significant beyond that
roughly $3 million, $3.5 million a quarter.

Gentiva, with $2 billion in expected revenues, will spend a mere $12 to $14 million on capital items. That's a mere 0.6% to 0.7% of net revenues. Amedisys, with $1.25 billion in revenues in 2013, spent $18 million on capital expenditures.

A commenter suggested Gentiva leaders are spit shinging the financials for potential buyers. Today's underinvestment could be tomorrow's higher stock price. A few months ago a Gentiva executive stated:

We've had some rocky years. In
this industry there's been a negative environment that's been out there
in both the home health and hospice. We all hope that will subside over
time and we'll get back to focusing on the patient need, patient care and the industry will start to climb again.

With attention on deals, deals and more deals and driving costs out via the OneGentiva initiative, patient need and patient care remain on the back burner.

Management is clear on their priorities. How many patients are aware of Gentiva senior leaders' needs? Patients, especially those on hospice, should feel them directly or indirectly. I pray it's not a direct hit from the Gentiva leadership bus.